Proposed Highlights. Governor Chris Gregoire. Protecting Our Values During Tough Times. December Office of the Governor

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1 Proposed Budget & Policy Highlights Governor Chris Gregoire Protecting Our Values During Tough Times December 2008 Office of the Governor

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3 Table of Contents Proposed Budget Focusing on Services that Matter Most...4 Proposed Budget Expenditures...6 Washington s Economic Outlook...7 Balance Sheet...8 Budget and Policy Overview Education...10 Public Safety...15 Human Services...18 Health Care...21 Natural Resources...23 Government Efficiency...25 Transportation...27 Capital Construction & Local Assistance...30

4 NOVEMBER 2008 $1.9 billion My budget protects our values during these tough times Our state is facing significant economic turmoil. The deepening national recession is already the longest in a quarter century and has resulted in severe budget shortfalls in states across the nation. People are losing their jobs unemployment has risen from 4.6 percent to 6.3 percent over the past year. Our state is not immune and our revenue largely reliant on a sales tax is down dramatically, resulting in the largest budget gap in state history. We took responsible steps to address potential economic challenges. In 2007, I proposed a constitutionally protected rainy day fund to help us prepare for future downturns. My proposal was adopted by the Legislature and a vote of the people. We immediately began putting money in this account, which now sits at just under $430 million. I also left a large surplus in the budget at the conclusion of the 2008 legislative session, which, when combined with the rainy day fund, totaled $850 million, one of the largest in state history. But we are in no ordinary recession. No one could have predicted the reckless decisions in credit and financial markets that gave us this severe economic crisis that began on Wall Street and has spread to Main Street. The large surplus and rainy day fund we created have been swamped by the revenue shortfalls from the second half of Washington is not alone. Today, 42 other states are looking at shortfalls. When all is said and done, states are likely to face more than $100 billion in budget shortfalls this fiscal year and into the next budget cycle. SEPTEMBER JUNE $529 million $167 million Washington s Revenue Problem $2.6 billion lost during 2008 This drastic decrease in revenue has created a tremendous challenge for us in constructing the state budget. Since the November forecast, revenue has been predicted to decline significantly while the cost of providing services such as basic education and medical assistance has risen sharply over the past two years. Increases are also expected in caseloads, or the number of people we need to serve. The result is an approximately $5.7 billion shortfall for , which is a little more than the entire budgets of our higher education institutions and the Department of Corrections combined. 2

5 We cannot cut the almost 60 percent of the budget devoted to items we are required to provide, such as basic education, federally mandated Medicaid, pensions and debt service. This forces us to balance the budget through cuts in the remaining 40 percent of the budget. In writing the budget for , we began with one basic premise: Now is not the time to raise taxes on our residents and businesses. These are hard times for us all. Our families are tightening their belts, and that s what government must do. The state must squeeze every ounce of value out of each taxpayer dollar. A wise man once told me that I needed to love my budget since I was going to be spending so much time on it. There is no way I can love this budget. We have to give up or shrink too much. There is something for everyone to not like in this budget. But I believe we have faced the challenge, made the tough choices and lived within our means. I am glad to discuss these choices with my fellow citizens and the Legislature. Now is the time for us to work together Democrats and Republicans, program advocates and citizens, all levels of government. If you don t like a cut in funding, tell me. But then tell me where you would cut funding in other words, help me to find the solution. This is a difficult challenge for all of us. The budget is a work in progress, and my proposal is the first step in a long process that will continue in the Legislature in the coming months. We are up to this challenge. Let us find opportunity in adversity to bring reform that will make us stronger. I am confident we will succeed if we all pledge to come together as a community, neighbor-toneighbor, and help each other. $3 Billion in Spending Increases from Rising Caseloads and Enrollments Near General Fund-State, in millions K-12 SCHOOLS MEDICAL ASSISTANCE HIGHER EDUCATION $232 DEBT SERVICE $178 PRISONS/COMMUNITY CORRECTIONS $178 LONG-TERM CARE $141 PENSION RATE INCREASE $149 DEVELOPMENTAL DISABILITIES $113 58% of the Budget is Off Limits Natural Resources 1% Other K-12 3% Other General Education Government 0.5% 2.5% Higher Education 10% Basic Education 38% $725 Other Human Services 25% $1,098 Medical Assistance 12% Governor Chris Gregoire Debt Service & Pensions/Other 8% 3

6 Smarter Budgeting: Priorities of Government In these tough times, Governor Gregoire used the Priorities of Government process to build her budget. This process is different from budgeting as usual, which adds to or cuts from an existing budget. Priorities of Government was launched in the spring with a government-wide assessment of services with two purposes: Establish a clear set of results that citizens expect from state government. Reprioritize state spending to focus on services that matter most in achieving those results. The first step required state agencies to rank their activities among three categories: low, medium or high, when compared to the agency s mission. The second step involved 10 multi-agency teams that were charged with looking beyond their own agencies borders for the means to maintain or improve highpriority services despite budget constraints. To accomplish this, the teams had to: View state government as a single, integrated enterprise. Achieve results, at lower cost, through innovative budget solutions. Reprioritize spending, eliminate programs or consolidate similar programs in different agencies. In the final step, the teams delivered recommendations that prioritized state agency services. These recommendations were reviewed by a guidance team and then forwarded to Governor Gregoire for her consideration as she shaped this budget. The Governor s budget makes some tough choices. Her decision to avoid increasing taxes during a recession is to be applauded. Washington state s competitive position depends on sound tax policy and this is a step in the right direction. Bruce Kendall, Chair Washington Economic Development Commission Focusing On Services That Matter Most In constructing the budget for , Governor Gregoire began with one basic premise: Now is not the time to raise taxes on our residents and businesses. State government must live within its means and construct a budget that emphasizes our most important priorities by protecting families and kids the best we can. Five primary values represent the top priorities of the budget. These values guided Governor Gregoire s decisions when making tough choices with no new taxes: 1. We must ensure a solid foundation for our future, and that means investing in and protecting our children. 2. We must maintain the safety of our communities. 3. Government must partner with our communities to support and protect our most vulnerable. 4. We must lay the foundation for a strong quality of life and economy for the 21st century. 5. We are one state and it will take all of us working together to get through these tough times. Woven within each of these values is an emphasis on our children. We must make sure our children are safe in their homes, have high-quality health care and are provided with an education that will equip them with the skills and opportunity they need to succeed in the economy we are building for tomorrow. We are still preparing more than 8,200 low-income kids for school through early childhood education because it is the best investment we can make for our children. We are still educating 1 million students in grades K-12 because education is the foundation for their future. We are still providing higher education and job training for 300,000 people, because these services are our economic future. We are still ensuring that more than 650,000 kids receive health care. We are still protecting our communities safety. We are still helping 74,000 seniors and vulnerable individuals. We are still preserving and protecting our environment, with a particular focus on Puget Sound. These investments keep us true to our primary values and will keep our state moving forward. 4

7 cuts in Each budget area The budget cuts needed to close a $6 billion shortfall require reductions across all of state government. But Governor Gregoire used the values she shares with Washingtonians to guide where the reductions would be the smallest. Though the pain of these reductions will be felt by all, the Governor is committed to minimizing the effects felt by children. Because education is the foundation for our future, cuts in this area were smaller. Other programs that affect children were also reduced less, including health care and child protective services. Public safety programs also received smaller reductions. K-12 Percentage Cut from Maintenance Level by Area Proposed Budget and Supplemental Budget PUBLIC SAFETY EARLY LEARNING 5.6% 6.3% 6.4% Why Couldn t We Give Salary Increases to State Workers, Teachers and Care Workers? Specific laws govern the granting of cost-of-living adjustments or raises to teachers, state employees and care workers. These hardworking individuals provide immeasurably valuable services to the people of our state. They teach our kids, protect us from dangerous offenders, guard against environmental degradation and provide critical social services to our most vulnerable residents. They are well deserving of adjustments to maintain the value of their salaries. Unfortunately, we had no choice but to put their raises on hold. The cost of these salary increases would be about $678 million over the next two years. We looked hard at whether we could afford these increases during these difficult times, and saw we could not. Forgoing the raises allowed us to keep classes smaller in our K-12 schools and protect early learning and teachers jobs, as well as avoid even deeper cuts to services for our most vulnerable and health care for children and families. Governor Gregoire has the highest regard for our teachers, state employees and those who serve the most vulnerable. She is hopeful that our economic situation will improve quickly so funding for salary increases becomes available in the state budget. HIGHER EDUCATION 7.6% HEALTH CARE & HUMAN SERVICES 12.2% NATURAL RESOURCES 12.2% 5

8 Proposed Budget Expenditures Near General Fund-State: Operating Distribution of Near General Fund-State Expenditures Corrections 5% General Government 3% Health Care Authority/ Dept. of Health 2% Bond Retirement & Interest 5% Social & Health Services 28% Natural Resources 1% All Other* 2% Higher Education 11% Public Schools 43% Category Dollars in Millions Public Schools $14,232 Higher Education 3,588 Social & Health Services 9,246 Corrections 1,809 Bond Retirement & Interest 1,805 Health Care Authority/ 653 Dept. of Health General Government 948 Natural Resources 451 All Other* 777 TOTAL $33,509 *All Other includes Other Education, Transportation, Contributions to Retirement, Other Special Appropriations. All Funds: Operating Plus Transportation Capital Distribution of All Funds Expenditures General Government 6% Health Care Authority/ Dept. of Health 3% Bond Retirement & Interest 4% Transportation 10% Natural Resources 2% Corrections 3% Source: Office of Financial Management All Other* 5% Social & Health Services 29% Public Schools 24% Higher Education 14% Category Dollars in Millions Public Schools $15,782 Higher Education 9,523 Social & Health Services 19,348 Corrections 1,822 Bond Retirement & Interest 2,850 Health Care Authority/ 1,637 Dept. of Health General Government 4,206 Natural Resources 1,515 Transportation 6,507 All Other* 2,957 TOTAL $66,147 *All Other includes Other Education, Contributions to Retirement, Other Special Appropriations. 6

9 Washington s Economic Outlook The Present Washington s economy began to slow in 2008 due to the bursting real estate, financial and commodities bubbles that affected local, national and international economies. However, throughout Governor Gregoire s first term, Washington s economy outperformed that of the nation. Since 2005, Washington has gained almost 214,000 jobs, a growth rate of about 8.1 percent. The state s strong growth was aided by significant expansion in the aerospace industry, very strong growth in the housing sector and an increase in disposable household income from home mortgage refinancing. Washington has a strong economic foundation. This includes a vital export base; robust, knowledge-based businesses in technological, professional, health and financial sectors; and a high quality of life that continues to attract new residents. Washington labor markets have weakened at the end of Fortunately, they have not experienced the longer and more severe retrenchment that has taken place at the national level. Washington s non-farm employment grew at a rate of 2.7 percent in 2007 and 2.1 percent in 2008, more than double the national rate. Personal income grew at a rate of 6.8 percent in The aerospace industry continued to expand with an employment increase of 8.3 percent in Employment in all other manufacturing sectors fell by 0.3 percent. Our unemployment rate averaged 4.7 percent in 2008, the lowest since 2000, although the rate rose to 6.3 percent in November The credit squeeze has hurt Washington s economy and revenue collections. Relative to the nation, our state s downturn will be modest. However, the effect on state revenues will be far more severe than warranted by the depth or duration of our downturn because this is a consumer-led recession. Consumer spending has to recover for state revenues to recover. Dr. Arun Raha, Executive Director Washington Economic and Revenue Forecast Council The Future Washington s economy is expected to experience some retrenchment during the next two years. Washington s economic forecast for 2009 and 2010 shows the state s economy battling recessionary forces. The November 2008 forecast by the state Economic and Revenue Forecast Council projected that growth in non-farm employment will likely decrease by 0.4 percent in 2009 and remain flat in These growth rates are similar to the employment change following the 2001 recession. However, they are notably higher than the likely national growth rate for non-farm employment of -1.0 percent in 2009 and -0.9 percent in A few Washington industries will continue to experience slow employment growth or decline through the next two fiscal years. These include the financial activities industry, reflecting the shakeout from the credit crisis, the puncture of the housing market bubble and a growing sense of consumer frugality. Construction employment will also be fragile as the residential and commercial markets adjust to excess inventory and credit market restructuring. Construction payrolls will likely decline by 7.1 percent in 2009 and 3.9 percent in % 5% Washington state Percent Change in Non-Farm Payroll Employment Washington state vs. U.S. average Actual Forecast Percent Change from Previous Year 4% 3% 2% 1% U.S. 0% -1% -2% Fiscal Year Source: Office of Financial Management 7

10 Proposed Budget: Balance Sheet Including Proposed 2009 Supplemental Budget General Fund-State, Dollars in Millions Resources Beginning balance November revenue forecast 28,627 30,070 Fund transfers/budget-driven revenue ,595 30,984 Consolidation of Health Services, Water Quality, VRDE accounts 1,723 1,503 31,318 32,487 Expenditures appropriations/ maintenance level 29,838 33,307 Governor Proposed 2009 Supplemental Caseload/enrollment updates 111 Costs and services adjustments 89 Expenditure reductions (626) 29,412 Additions 418 Backfill of Near GF-S accounts 197 Cuts (3,343) 30,579 Consolidation of Health Services, Water Quality, VRDE accounts 1,692 1,500 31,104 32,079 Balances GF-S balance Budget Stabilization (Rainy Day) Account balance Note: Legislation is being proposed that would merge the Health Services, Water Quality, and Violence Reduction and Drug Enforcement accounts into the General Fund, effective July 1, This revision does not contribute to solving the projected deficit, but will add $1.5 billion to both the expenditure and revenue amounts for the GF-S. For comparative purposes, the merger of these funds is shown in both biennia. 8

11 Proposed Budget: Balance Sheet Detail for Revenues General Fund-State, Dollars in Millions Fund Transfers FY enacted fund transfers Statutory fund transfer to the Budget Stabilization (Rainy Day) Account (124.0) (268.0) Treasurers Service Fund Fiscal Year 2008 reversions 60.3 Eliminate Health Services Account transfer from GF-S 53.0 Increase in Education Legacy Account transfer 11.0 Transfer Reading Achievement Account balance 1.7 Pension Stabilization Account interest transfer 3.0 Family Leave Account 4.5 Excess streamlined sales tax set-aside 8.6 Water Quality Account Retirement Expense Account 6.2 Public Safety and Education Account 3.0 Waste, Recycling and Litter Account 4.0 State Toxics Control Account 13.0 Local Toxics Control Account 75.0 Use of bonds to replace lottery cash in the capital budget Use of Budget Stabilization Account Budget Driven Revenue Loss of liquor revenues due to transfer of expenditures (0.9) (1.5) Additional liquor revenues 12.9 Department of Revenue enforcement 38.2 (0.9) 49.6 $187.7 $731 9

12 Education Early Learning Believing in the primacy of early learning opportunities as a means to build a foundation for our children and our state s future, Governor Gregoire established the Department of Early Learning three years ago. This agency leads in the development of education for our youngest citizens and provides support for parents as their children s first and most important teachers. In the intervening years, the state has taken important steps to ready children for success in school and in life. The agency is also improving the safety and quality of early learning and child care programs in the state through more oversight and by strengthening child care licensing rules. This proposed budget continues progress in offering services for our youngest learners and supporting those who provide for their care and education. Proposed Reduction $8.5 million Proposed Spending $124.9 million Goals Preserve high-quality early learning programs for young children. Maintain safe and healthy environments for children in child care settings. What We Invest In Early Childhood Education and Assistance Program Funding covers 8,226 slots for 3-year-olds and 4-year-olds at an average rate of $6,674 for high-quality prekindergarten programs through the state s Early Childhood Education and Assistance Program. ($112.9 million General Fund-State) Quality Rating and Improvement System The Department of Early Learning and the private-public partnership Thrive by Five, Washington continue work to pilot a Quality Rating and Improvement System. This system improves the quality of early care and education programs and provides parents with information they need to choose high-quality child care. ($1 million GF-S) Quality improvement specialists Five quality improvement specialists are funded to help maintain safety and health standards in 7,534 statelicensed early learning homes and centers. The specialists will work with 90 federally funded licensors. ($870,000 GF-S) How We Achieve Savings Suspension of the Career and Wage Ladder, which creates incentives for child care teachers to advance their education and professional development. ($3.0 million GF-S) Suspension of funding for the Family, Friends and Neighbors program that provides interactive learning opportunities to young children and their families. ($2.0 million GF-S) 10

13 Elimination of state funds for the Child Care Resource and Referral Network. The network will continue to receive $5.5 million in federal funding to operate local referral hot lines and provide training, and $700,000 in federal funding for the Washington Scholars Program. ($1.7 million GF-S) Other reductions including pension changes. ($1.8 million GF-S and other funds) K-12 Education Among all the functions of state government, providing funding for basic education is paramount. Individually and collectively, our more than 1 million students embody the promise of a brighter, more prosperous future for families and communities across the state. Despite declining state revenues, it is imperative that we continue to invest in the education of our children. Economic revitalization truly starts in the classroom. Under Governor Gregoire s leadership, significant progress has been made in classroom instruction, teacher preparation and learning assistance. Despite areas of reduction or suspension, her proposed budget continues in that direction. Proposed Reduction $800 million Proposed Spending $14.4 billion Goals Maintain basic education funding for schools. Prioritize programs that demonstrate links to research-based best practices. Maintain programs focused on improving student achievement and closing the achievement gap. Retain focus on the quality of instruction. Provide state and regional infrastructure to effectively manage the K-12 system. What We Invest In K-12 basic education services ($12.2 billion General Fund-State), including: Special education services. ($1.3 billion GF-S) Pupil transportation. ($628.0 million GF-S) Learning Assistance Program. ($207.2 million GF-S) Several programs outside the K-12 basic education area, including: Initiative 728 for class size reductions, early learning, professional development and extended learning opportunities. ($732.9 million Student Achievement Fund) Levy equalization. ($360.8 million GF-S) K-4 class size enhancements. ($260.0 million GF-S) All-day kindergarten for lowest income schools. ($81.0 million Education Legacy Trust Account) Professional development days targeted at implementing new math and science standards. ($69.9 million GF-S) 11

14 In addition, a number of targeted grant and technical assistance programs will continue through the biennium, including those that: Improve student achievement and close the achievement gap, which includes the focused assistance program for schools with large percentages of struggling students, as well as diagnostic assessments. ($20.4 million GF-S, $4.4 million Education Legacy Trust Account) Support the quality of instruction, including alternative routes to teacher certification, National Board bonuses and the Leadership Academy. ($66.6 million GF-S, $2.1 million Education Legacy Trust Account) Support the foundational math and science effort, including school district math and science coaches, Educational Service District math and science experts, math and science standards and curriculum development, after-school math assistance and the LASER science program. ($10.2 million GF-S, $7.3 million Education Legacy Trust Account) Support student health and safety through school breakfast and lunch programs, nurse corps and training for school safety personnel. ($13.2 million GF-S) Provide school district financial technical assistance. The Office of the Superintendent of Public Instruction predicts that more school districts with declining fund balances could become subject to state oversight. A group of experts is created through the Educational Service Districts to help school districts with financial planning and monitoring. The OSPI will coordinate this technical assistance. ($3.0 million GF-S) Services at School for the Deaf and School for the Blind Specialized instruction is provided for approximately 200 students at the School for the Deaf and School for the Blind. ($30.9 million GF-S) How We Achieve Savings Elimination of lower-priority programs, including multi-year pilot programs and specialized programs that do not have wide impacts across the state, such as the civics curriculum pilot project, LEAP bilingual pilot, accountability institutes, math helping corps and reading corps. ($22.5 million GF-S) Suspension of 24 percent of Initiative 728 funds. ($178.0 million Student Achievement Fund) Reduction in levy equalization, which provides a state match to local school districts with higher-thanaverage tax rates to raise a local levy (those districts are more property poor than average). For calendar years 2010 and 2011, allocations for levy equalization are reduced by 33 percent. This timing allows school districts to phase in the reductions over two school years. ($125.4 million GF-S) Refocus two state-funded professional development days on implementing new math and science standards. Separate grant funding for math and science professional development is eliminated. ($39.7 million Education Legacy Trust Account) Suspension of Initiative 732 funds for teacher and other K-12 employee salary increases. ($349.2 million GF-S) Elimination, reduction or suspension of grant programs that provide support services such as readiness to learn, building bridges grants, after-school grants and school safety plan grants. ($48.3 million GF-S) Other reductions including pension changes. ($36.9 million GF-S and other funds) 12

15 Higher Education Washington s public colleges and universities are the economic engine that drives the state s economy and will drive our recovery. Students with college degrees earn more over their lifetimes, report working in more fulfilling jobs and contribute stability to their communities. Proposed Reduction $300 million Employers look for trained and skilled workers. Our higher education institutions fill this need by graduating students ready to join the work force and contribute to society. Yet even with 100,000 students in the four-year college system and 200,000 in the community and technical college system, demand for enrollments continues to top state funding. Governor Gregoire s proposed budget reduces state support for public colleges and universities, but maintains current enrollment Proposed Spending $3.6 billion levels. Tuition increases are consistent with established state policies that place limits on annual tuition growth. Student financial aid will increase to help keep tuition affordable for needy students. Goals Preserve access to higher education by maintaining enrollment levels. Maintain affordability for lower-income students by increasing financial aid grants to reflect higher tuition rates. Acknowledge the diverse missions of the two-year and four-year institutions. Maintain flexibility for state colleges and universities while establishing targets in vital areas such as highdemand fields. What We Invest In Overall funding for two research universities and four regional universities and college More than 100,000 students seeking a baccalaureate, graduate or professional degree are served at the state s public college and universities. ($1.5 billion General Fund-State, $143.0 million Education Legacy Trust Account) Overall funding for the community and technical college system More than 200,000 students are served in this system, many of whom enroll to upgrade their jobs skills or quickly retool for a new career. ($1.4 billion GF-S, $95.1 million Education Legacy Trust Account) Student financial aid Student financial aid programs, including the State Need Grant program, will increase to match higher tuition rates. The overall growth of financial aid programs is modified by making incremental changes to eligibility and grant amounts for students from families with higher incomes. ($376.6 million GF-S, $79.8 million Education Legacy Trust Account) What We Authorize The governing boards of the state college and universities are authorized to raise tuition for resident undergraduate students consistent with tuition caps established in state policy. A lower cap is applied to tuition at the community and technical colleges. On average, tuition can increase by about $450 per year at the research institutions, $310 per year at the regional college and universities, and $125 per year at the community and technical colleges. ($162.6 million local funds) 13

16 How We Achieve Savings Reductions, across the board, of 13 percent for the research and regional institutions and 6 percent for the community and technical colleges. Higher education institutions are given the flexibility to determine how best to implement this reduction. Effects on campus could include fewer course offerings, larger class sizes, reductions in faculty positions and fewer support services for students. Each institution must report on a number of specific outcome measures important to state policy goals, such as graduating/educating students in fields crucial to work force development, math and science, and skills training. The lower rate of reduction for the community and technical colleges is in recognition of their unique mission in job training and skills development essential to the state s economic recovery. ($341.9 million GF-S) Suspension of Initiative 732 funds for faculty and staff in the community and technical colleges. ($33.8 million GF-S) 14

17 Public Safety The protection of persons and property is one of the core missions of state government. A multi-pronged approach is used to maintain public safety: prevention, preparedness and response. Governor Gregoire s administration has made a priority of keeping Washingtonians safe by holding felons accountable for their actions, working to reduce repeat criminal activity and helping former offenders to become law-abiding members of society. She has also presided over the largest expansion of the state correctional system to house offenders and worked with the law enforcement community to enact protections against sex offenders. Proposed Reduction $200 million Proposed Spending $2.7 billion Goals Incarcerate and rehabilitate adult and juvenile offenders. Respond to and prevent crime and vehicle collisions. Provide disaster preparedness and response. Increase traffic safety. What We Invest In Holding felons accountable Communities are kept safer by holding felons accountable for their actions. The Department of Corrections incarcerates more than 18,000 inmates in 15 major institutions located across the state. ($1.3 billion General Fund-State, $7.8 million other fund sources) Community Supervision Community supervision and work-release programs help ensure a successful reentry into communities for offenders upon their release from incarceration. The Department of Corrections provides supervision and treatment to 13,000 highest-risk offenders, as well as nearly 700 work release opportunities to help offenders find jobs and build skills so they can become productive members of their communities. ($241.7 million GF-S, $24.3 million other fund sources) Civil commitment of sexually violent predators The Office of the Attorney General is responsible for investigating, filing and prosecuting all sexually violent predator cases in 38 of the state s 39 counties. ($5.8 million Legal Services Revolving Account) Offender reentry Evidence-based programs now in place at the Department of Corrections are improving outcomes for offenders and reducing recidivism rates. Program goals are validated by the fact that both the state violent crime rate and the property crime rate are at their lowest point in the past 15 years. ($61.9 million GF-S) Assistance for victims of crime Medical, legal and financial assistance are available to victims of crime who have suffered physical or mental trauma. ($61.4 million other fund sources) 15

18 Training for local law enforcement officers Training for 1,700 new law enforcement officers is provided through the Basic Law Enforcement Academy. Topics include criminal law, criminal procedures, patrol procedures, crisis management, communications, community policing, ethics, defensive tactics, traffic and firearms. ($16.3 million Public Safety and Education Account, $460,000 Municipal Criminal Justice Assistance Account) State Crime Laboratory The Washington State Patrol operates crime laboratories in Seattle, Tacoma, Marysville, Spokane, Kelso, Kennewick and Tumwater. The laboratories provide forensic services for criminal justice agencies in the state. ($22.2 million GF-S, $7.0 million Violence Reduction and Drug Enforcement Account, $4.7 million State Patrol Highway Account, $11.6 million other fund sources) Criminal records management The Washington State Patrol maintains databases of interest to law enforcement officers and criminal justice agencies throughout the state. Databases include fingerprint-based criminal history record information, sex/ kidnapping offender registration and missing persons data. ($13.4 million GF-S, $6.9 million Fingerprint Identification Account, $3.0 million State Patrol Highway Account, $100,000 other fund sources) Investigative assistance for criminal enforcement This Washington State Patrol division provides investigative coordination, support and training for law enforcement agencies throughout the state. Services provided include SWAT (Special Weapons and Tactics team) responses to tactical incidents and clandestine drug labs, recovery of evidence that may exist on various media, and training on gang enforcement and trends. ($10.8 million GF-S, $9.2 million GF-F, $3.2 million State Patrol Highway Account, $2.5 million other fund sources) Highway traffic enforcement Roadways are made safer through the enforcement of traffic laws, investigation of collisions and assistance to motorists in need. Enforcement emphasis on drinking drivers, aggressive driving, speeding motorists and people not wearing seat belts is maintained. Emphasis already is paying dividends: The overall trend for vehicle fatalities is declining, with the 2007 vehicle fatality rate the lowest the state has ever recorded. ($225.1 million State Patrol Highway Account-State, $11.0 million GF-S, $2.9 million other fund sources) Enhanced 911 The Military Department manages the Enhanced 911 program with a number of community partners and others to ensure that state residents have access to emergency assistance. More than 90 percent of the Enhanced 911 funds are passed through or provide direct support to local jurisdictions. ($39.4 million Enhanced 911 Account) Disaster preparedness and response The Military Department s Emergency Management Division administers Homeland Security grant funds and disaster relief funds after a federal declaration of a major disaster or emergency, and coordinates the state s efforts to recover from disasters. Nearly 90 percent of the funding is passed through to individuals and local jurisdictions. ($6.3 million GF-S, $103 million GF-F, $72.5 million Disaster Response and Nisqually Earthquake accounts) 16

19 Flood control infrastructure Bond authorization has been secured for the state s portion of the Chehalis-Centralia Flood Control Project. The project is a partnership among local governments, the state of Washington and the federal government. ($50 million capital) Prevent, prepare for and fight wildfires Education and assistance make it more likely that homeowners will build defensible space around at-risk homes. This space helps prevent fires and makes them less damaging. Training prepares crews to attack fires when small to keep them from becoming threats to public safety and land resources. ($37.6 million GF-S, $42.9 million other fund sources) Enforcement of consumer protection laws The Office of the Attorney General enforces state laws, recommends changes in state law and provides education to protect consumers and legitimate businesses from unfair or deceptive trade practices. ($7.9 million GF-S, $2 million other fund sources) How We Achieve Savings Elimination of supervision for misdemeanants and low-risk felony offenders. Supervision of these offenders has not been proven effective in reducing recidivism. Supervision in the community custody program in the Department of Corrections will be intensified for the remaining offenders. This item includes: Elimination of supervision for misdemeanants. ($31.7 million GF-S) Discontinuation of community supervision for low-risk offenders, except for sex offenders and violent offenders. ($9.9 million GF-S) Setting of community custody sentence lengths at 12 months. ($27.2 million GF-S) Closure of the Naselle Youth Camp. The Juvenile Rehabilitation Administration now has the residential capacity to house 835 youth. The November 2008 residential caseload forecast projects a drop in population, lowering the number of beds needed to 658 by Fiscal Year ($12.9 million GF-S) Reduction of funding to expand evidence-based programs. Evidence-based programs, such as family functional therapy and aggression replacement therapy, have not been fully put into place in the Juvenile Rehabilitation Administration and the courts. ($8.7 million GF-S, $1.4 million Reinvesting in Youth Account-State) Reduction of chemical dependency treatment funding for adult outpatient and residential services. This will eliminate addiction treatment to 13,000 low-income patients and reduce detoxification services for 2,700 low-income patients. ($11.4 million GF-S) Authorization of early release for elderly and ill offenders. We will allow early release for elderly and ill adult offenders who are chronically or terminally ill and 55 years or older. Offenders serving time on a violent or sex offense charge are excluded. ($1.5 million GF-S) Deportation of non-citizen offenders with property or drug offenses to their country of origin. ($9.1 million GF-S) Other reductions including pension changes. ($87.6 million GF-S and other funds) 17

20 Human Services As a society, we recognize the importance of taking care of the most vulnerable among us. Whether it s children whose families are unable or unwilling to take care of them, or severely disabled adults, Washington citizens endeavor to help with food, shelter and physical safety resources. Governor Gregoire s proposed budget serves Washington s children and most vulnerable citizens with essential services as it achieves administrative efficiencies and promotes greater self-sufficiency. Goals Protect vulnerable populations. Proposed Reduction $478 million Proposed Spending $5 billion Preserve access to essential services. Maintain safety. Maintain core state services. Promote cost effectiveness. Promote self-sufficiency. Maintain evidence-based programs. Maintain some prevention activities. What We Invest In Child welfare services Protecting children is primarily the responsibility of families. The state intervenes to protect children only when families are unable to. When children must be removed due to abuse or neglect, they are provided with foster care. We provide services that build on family strengths to prevent out-of-home placements and reunify families when placement occurs. Services include counseling, assessments and child care. ($352.2 million General Fund-State, $179 million GF-F) Adoption support services Placing children in permanent homes is a top priority. More than 11,000 families with adopted children receive a cash payment to cover their needs. Adopted children may also receive evaluation and counseling services, and families may access child care and respite services. ($90.0 million GF-S, $82.0 million GF-F) Adolescent services Adolescents who run away from home or are in conflict with their parents have safe alternatives from the streets. Services include short-term stays in crisis residential centers where counseling with a family reunification emphasis is provided. Youth may access the responsible living skills program for safe housing and services to successfully transition to independent living. ($16.8 million GF-S, $18.2 million GF-F) 18

21 In-home services for the elderly and people with developmental disabilities Washington is a leader in long-term care services that allow 30,000 individuals to remain independent by providing care in their homes rather than in an institutional setting. More than 12,000 individuals with developmental disabilities receive Medicaid personal care services to assist with activities of daily living such as bathing, dressing and eating. ($955.0 million GF-S, $979.2 million GF-F) Residential services for the elderly or physically disabled Nursing homes serve 10,800 Medicaid clients. Adult family homes and boarding homes offer an alternative for the 10,500 elderly or other individuals with disabilities who cannot remain in their own homes but do not need nursing home care. ($503.7 million GF-S, $685.7 million GF-F) Residential services for people with developmental disabilities Residential habilitation centers provide services for 1,000 clients with developmental disabilities. Supported living, boarding homes, adult family homes and state-operated residences provide an alternative for the 5,400 clients no longer able to remain in their own homes and who choose to live in the community. ($486.6 million GF-S, $550.4 million GF-F) Place additional individuals with developmental disabilities on the Medicaid waiver. The 2,500 clients with developmental disabilities who receive employment and day services paid solely with state funds are transitioned to the Medicaid waiver if they are Medicaid eligible. This makes them eligible for more services, but federal funding reduces costs to the state. ($12.8 million GF-S, $14.8 million GF-F) Employment and day services for individuals with developmental disabilities About 9,400 adults receive assistance to find and maintain employment. ($85.3 million GF-S, $63.2 million GF-F) In-patient and out-patient mental health services The state provides crisis intervention and inpatient treatment services to individuals in acute mental health distress who are gravely disabled, or a danger to themselves or others. The state also funds intensive, community-based outpatient treatment services to Medicaid-eligible individuals with significant disabilities through partnerships with Regional Support Networks. ($881.0 million GF-S, $664.0 million GF-F) Child support collections for TANF Child support is collected for more than 380,000 families each month. Mirroring changes in federal law, families receiving Temporary Assistance for Needy Families (TANF) cash assistance may now keep a portion of the child support funds collected by the state. Child support collected for families not on TANF go directly to the family. ($27.3 million GF-S) WorkFirst grant and services Temporary Assistance to Needy Families (TANF) grants are provided to more than 53,000 families through the WorkFirst program. Parents participate in activities that help them prepare for work and achieve selfsufficiency. Post-TANF career services help families maintain employment. ($464.0 million GF-S, $828.0 million GF-F) 19

22 Food programs More than 642,000 clients now receive food stamps. Recently expanded eligibility for the state s Basic Food Program is maintained for households with incomes below 200 percent of the federal poverty level. Funding for the state s food bank programs also is maintained. An additional $5 million will expand the Emergency Food Assistance Program, which provides funding and food for distribution to local food banks and meal providers. ($76.6 million GF-S, $50.5 million GF-F) Initiative 1029 background checks and training Although the higher training requirement of Initiative 1029 is suspended for two years, its most important feature new federal background checks for home care workers is being implemented. Computer system preparation work is included to prepare for the training and certification requirements that will take effect in the biennium. ($1.2 million GF-S, $1.2 million GF-F) How We Achieve Savings Discontinuation of the Adult Day Health program. This primarily Medicaid-funded program serves about 1,900 elderly and adults with developmental disabilities. As of June 30, 2009, the federal government will no longer provide matching funds. ($20.3 million GF-S, $20.3 million GF-F) Elimination of funding for child welfare pilots to provide additional training for foster parents caring for high-needs children. ($2.6 million GF-S) Elimination of secure crisis residential centers. High-cost placements are eliminated and lower-cost residential services for adolescents in conflict are retained. These services include Hope beds, semi-secure crisis residential services and responsible living skills placements. ($9.4 million GF-S) Reduction of nursing home reimbursement rates. Medicaid nursing home rates are adjusted every two years. As of July 1, 2009, the average rate is projected to increase 2.5 percent. From that point, rates are reduced 7.5 percent, so the net reduction will be 5 percent. ($46.2 million GF-S, $42.6 million GF-F) Consolidation of residential habilitation centers. Yakima Valley School is closed. The 98 residents will be transferred to community residential settings, private nursing homes or another institution. ($1.0 million GF-S, $600,000 GF-F) Reduction of funding for mental health services through local Regional Support Networks. The non- Medicaid rate is by reduced by 7.4 percent and the Medicaid rate by 3.2 percent. ($30.5 million GF-S) Elimination of grants to individuals in the General Assistance-Unemployable program. Monthly grants are no longer provided to approximately 21,000 individuals in the GA-U program and 6,500 clients in the Alcoholism and Drug Addiction Treatment and Support Act program. Effects of this action will be partially offset by $20 million provided for additional emergency housing and $40 million to community clinics. ($160.6 million GF-S) Increase of accountability in the WorkFirst program. Reductions in Temporary Assistance to Needy Families (TANF) caseloads are expected by streamlining the sanction process and by helping parents move to work more quickly. ($30.4 million GF-S) Other reductions including pension changes. ($177.0 million GF-S and other funds) 20

23 Health Care Affordable heath care is integral to keeping our families secure, businesses competitive and our state strong. Governor Gregoire s first term was marked with progress in making high-quality health care available to more Washington children and families. Other advances were made in prescription drug savings, better patient safety and more stringent licensing oversight. The Governor s budget continues her commitment to protecting the public s health by providing the most essential services to those most in need. Goals Proposed Reduction $990 million Proposed Spending $4.7 billion Improve the public s health. Minimize future health care costs through prevention and appropriate treatment. Improve the quality of the health care system. Improve or maintain access to health care. What We Invest In Health care for Washingtonians We continue to provide access to health care for low-income Washington residents. The Medicaid program uses state and federal funds to provide more than 300,000 adults with services that include dental, vision and hearing benefits. ($2.0 billion General Fund-State) Apple Health for Kids More than 600,000 children are enrolled in the Apple Health for Kids program. This program will offer subsidized coverage to all children whose family incomes are less than 250 percent of the federal poverty level, with those more than 200 percent continuing to pay a portion of the premium. ($1.5 billion GF-S) Basic Health Plan Other state residents will be served through state-only programs such as the Basic Health Plan. ($341.0 million GF-S) Safety net Community clinics, which offer primary care and emergency services for all members of the community, are infused with additional funds to offset reductions in the General Assistance-Unemployable program and the Basic Health Plan. ($40.0 million GF-S) Public health Preventing and reducing communicable diseases keep Washingtonians healthier. Funding crucial to local public health is maintained at existing levels. ($68.0 million GF-S) 21

24 Health care system investments These programs support our health care delivery system in these areas: Inpatient and outpatient hospital services. ($2.0 billion all fund sources) Prescription drugs and vaccines. ($920 million all fund sources) Services through health clinics. ($644 million all fund sources) Managed care premiums. ($2.9 million all fund sources) Health care professionals. ($1.1 million all fund sources) How We Achieve Savings Reduction of funding for the Basic Health Plan by 42 percent. The Health Care Authority will reduce enrollment in the Basic Health Plan. It will also restructure the program to allow coverage for as many people as possible. ($252.0 million GF-S) Apple Health for Kids. Funding to provide subsidized health care coverage to children whose family incomes are between 250 percent and 300 percent of the federal poverty level will be suspended. ($6.1 million GF-S, $7.9 million GF-F) Elimination of medical coverage for the General Assistance-Unemployable program. Medical coverage continues for the aged, blind and disabled, and those clients who meet the criteria for Social Security disability. ($251.3 million GF-S) Reduction of rates paid to managed care companies. The 1 percent reduction to managed care rates starting January 2009 will continue through the biennium. Funds set aside for 2.5 percent growth in premiums will be suspended, for a total reduction of $86.9 million. ($37.7 million GF-S, $49.2 million GF-F) Modification of hospital rates. Rates paid to hospitals, excluding psychiatric hospitals, are reduced by 4 percent for inpatient and outpatient services. ($46.9 million GF-S, $53.9 million GF-F) Elimination of the universal vaccine program. The state will no longer purchase vaccines for children not covered by Medicaid. ($49.6 million GF-S) Implementation of pharmacy purchasing initiatives. Savings derive from increasing the use of generic drugs in state health programs by 20 percent. Additional savings accrue from consolidating drug purchasing and reducing coverage for some drugs. ($108.6 million GF-S, $280.8 million GF-F) Other reductions including pension changes. ($237.8 million GF-S and other funds) 22